China takes fast lane in growth

BEIJING, Dec. 2 -- China's manufacturing sustained rapid growth in November, shored up by the country's strengthened economy and improved profit margins among producers, according to a pair of definitive indexes released Tuesday.

An index produced for HSBC, based on a poll of purchasing executives in manufacturing, hit a record high of 55.7 in November, while a parallel official index was unchanged at an 18-month peak of 55.2.

Together, the surveys showed that China's economy has largely recovered from the global downturn thanks to aggressive pro-growth measures adopted a year ago.

The official Purchasing Managers' Index, measuring manufacturing activity, settled at 55.2 last month, the same as the figure in October and up from 54.3 in September, the China Federation of Logistics and Purchasing said.

STEADY TREND

The PMI, which includes forward-looking elements such as orders for sales, has been above 50 for nine straight months and extended the 18-month high in November reached the previous month.

A reading above 50 refers to expansion.

HSBC's China Purchasing Managers' Index rose to a record high of 55.7 in November from 55.4 in October, Reuters reported.

The index, based on a survey dating back to April 2004, has steadily recovered from a record low of 40.9 in November 2008 in the depths of the global credit crunch.

It is the eighth month in a row that the index, designed to provide a timely snapshot of business conditions in industry, has been above the watershed of 50.

"The growth momentum in China's PMI suggests industrial production is improving steadily," said Sherman Chan, an economist at Moody's Economy.com.

DIFFERENT VIEWS

The official PMI sub-index for production increased 0.1 from a month earlier to 59.4 in November. New orders slipped 0.1 to 58.4.

Industries including textile, apparel, tobacco, metal production and transport equipment manufacturing reported gains in new orders.

HSBC's new export orders sub-index rose in November to 57.5, the highest level since March 2005.

According to Reuters, respondents said they were seeing stronger demand because of a global recovery.

As is often the case, the two indexes told slightly different tales. Whereas HSBC's survey is slanted toward privately owned, export-oriented firms, the official one is weighted more heavily toward big domestic companies.

As government pump-priming gradually lost momentum, demand would be driven more by the private sector, Reuters quoted Zhang Liqun, a government economist, as saying.

"Such a change is positive, showing that China's economic growth is becoming more stable and sustainable," said Zhang, who works for the Development Research Center, a think-tank under the State Council, China's Cabinet.